ILPs for the digital age: lower management fees and greater flexibility

With a digital insurer, signing up for an investment-linked policy no longer has to be a long-drawn process involving lots of meetings and paperwork. PHOTO: GETTY IMAGES, THE STRAITS TIMES

Digital insurers are redefining investment-linked policies to meet investors’ changing needs

Much of our lives have moved online, a trend accelerated by the global pandemic. Investing, too, has evolved into something that can be done at the click of a mouse.

Signing up for Investment-Linked Policies (ILPs) has traditionally been a lengthy and complicated process, from that first meeting with a financial advisor to navigating the various rules and restrictions during the term of a plan.

An ILP is a type of plan that enables policyholders to invest in a diversified mix of assets through ILP sub-funds. ILP policyholders pay premiums that are then used to buy units in the sub-funds, as well as to purchase life insurance protection.

Etiqa Insurance has launched online direct purchase products such as Tiq Invest, the new digital ILP that is redefining the user experience in the new normal. Etiqa is part of Maybank, South-east Asia’s fourth-largest banking group and has a 69 per cent stake. This new breed of ILP is helping customers save money and time thanks to lower management fees, the convenience of being able to purchase the policies online and unprecedented flexibility.

“ILPs are stereotyped as complex and difficult to understand, often with lock-in periods. With Tiq Invest digital ILP, we aimed to keep things simple for the policyholder and to keep management fees low so that policyholders benefit more from the performance of the underlying funds,” says Mr Raymond Ong, CEO of Etiqa Insurance Pte Ltd.

Lower management fees and an agent-free sign-up process

Signing up for a conventional ILP can be a cumbersome process as customers are required to first attend an appointment with an agent.

For savvy digital natives with access to a wealth of information online, this can seem like an unnecessary and expensive inconvenience.

Unlike conventional ILPs, digital ILPs are not sold through agents. Instead, they can be purchased online without a prior consultation so long as the customer passes the Customer Knowledge Assessment (CKA) during the sign-up process.

For those who are reluctant to set up an appointment with an agent, this is an ideal arrangement as it not only saves time, but also reduces unnecessary human contact in the pandemic.

As there are no agents in the process, there are no agent commissions that add to the cost of digital ILPs.

For instance, fees for Tiq Invest’s digital ILP are some of the lowest on the market. The fees encompass a management charge fee and fund management fee. No agents’ commissions are charged.

“Tiq Invest charges a low fee of 0.75 per cent per annum, which compares favourably to other digital insurers who may be charging up to 1 per cent per annum,” says Mr Ong.

For those who require assistance, Tiq’s customer care and telesales personnel are just a phone call away and are ready to dispense advice for free.

Access to a diversified investment portfolio

Just like conventional ILPs, digital ILPs offer a way to build a diversified investment portfolio through one single product, with no guaranteed returns.

Tiq Invest digital ILP offers four packaged funds investing in five ILP sub-funds.

The ILP sub-funds cover multiple regions and offer a high degree of geographic diversification. For instance, the Emerging Markets Bond Fund offers exposure to emerging market countries, the Asian Tiger Bond Fund to Asia, and the Infinity Global Stock Index Fund to developed countries.

The ILP sub-funds are handled by some of the industry’s top fund managers, including BlackRock, PIMCO, Dimensional Fund Advisors Ltd and Lion Global Investors Limited.

Policyholders choose from one of the four packaged funds according to their risk tolerance.

Signing up for Tiq Invest is easy – simply choose your preferred packaged fund, based on your risk appetite. PHOTO: TIQ INVEST

For instance, investors with a high risk appetite can maximise growth potential by opting for the Aggressive packaged fund, a 100-per-cent equities packaged fund with 100 per cent allocation of the Infinity Global Stock Index Fund.

More circumspect investors, on the other hand, might opt for the Conservative packaged fund, which allocates 30 per cent to the Global Short Fixed Income Fund and 45 per cent to the Asian Tiger Bond Fund.

Great flexibility in uncertain times

Some investors are wary of signing up for conventional ILPs as they have the reputation for being inflexible. Policyholders are sometimes locked into a pre-defined payment structure, or cannot access their funds during the lock-in period without surrender charges, and must also abide by certain rules governing withdrawal.

With Tiq Invest, policyholders are able to access their funds without penalties.

The pandemic has also upended the traditional notion that careers follow a linear path. Breaks from work are possible and sometimes welcome, and fluctuating incomes are common due to the growing freelance and gig economy worldwide. What is more, the pandemic has introduced a further layer of uncertainty.

Tiq Invest’s digital ILP takes this fluidity into account and offers a much higher degree of flexibility when it comes to premium payments and withdrawals.

For instance, policyholders can choose between making regular top-ups and ad-hoc top-ups of one or more lump sums. In addition, there is no lock-in period, so they are free to make withdrawals whenever they wish.

Policyholders also enjoy a high degree of flexibility when managing their investments.

“We allow customers to make unlimited packaged fund switches for free. They can make quick changes to their investments according to their needs,” says Mr Ong.

“A customer could be feeling aggressive in his investment goals and take up the Aggressive packaged fund. A few months down the road, he might have a change in goals and decide to be more conservative in his approach. He could then initiate a packaged fund switch request on our customer portal, TiqConnect, or via the Tiq by Etiqa mobile app.”

To complement their investments, policyholders enjoy life insurance protection valued at the higher of 1) 105 per cent of their net premium or 2) account value, which offers their loved ones an added layer of financial security.

Find out more about digital ILPs and sign up online at Tiq Invest.

Tiq Invest is underwritten by Etiqa Insurance Pte. Ltd. (Company Reg. No. 201331905K).

Tiq Invest is an Investment-Linked Plan (ILP) which invests in ILP sub-fund(s). Investments in this plan are subject to investment risks including the possible loss of the principal amount invested. The performance of the ILP sub-fund(s) is not guaranteed and the value of the units in the ILP sub-fund(s) and the income accruing to the units, if any, may fall or rise. Past performance is not necessarily indicative of the future performance of the ILP sub-fund(s).

A product summary and product highlights sheet(s) relating to the ILP sub-fund(s) are available and may be obtained via A potential investor should read the product summary and product highlights sheet(s) before deciding whether to subscribe for units in the ILP sub-fund(s).

As buying a life insurance policy is a long-term commitment, an early termination of the policy usually involves high costs and the surrender value, if any, that is payable to you may be zero or less than the total premiums paid. You should seek advice from a financial adviser before deciding to purchase the policy. If you choose not to seek advice, you should consider if the policy is suitable for you.

This content is for reference only and is not a contract of insurance.

Full details of the policy terms and conditions can be found in the policy contract.

This policy is protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact us or visit the Life Insurance Association (LIA) or SDIC websites.

This advertisement has not been reviewed by the Monetary Authority of Singapore.
Information is accurate as at Nov 5, 2021.

This article was first published NOV 5, 2021, 4:00 AM SGT by The Straits Times. You can see the original article here. All information is correct as at the date of publication.



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